| Question 33 |  |
You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,000 and is expected to run for 7 years; model B is more expensive, with a price of $15,300 and has an expected life of 9 years. The annual maintenance costs are $830 for model A and $730 for model B. Assume that the opportunity cost of capital is 12 percent. Calculate EAC for both the models and choose which one should you buy?(Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.)
| The EAC of Model A is | | $, you should buy . ==================================================== Question 24 | |
Great Flights, Inc., an aviation firm, is considering purchasing three aircraft for a total cost of $164,850,069. The company would lease the aircraft to an airline. Cash flows from the proposed leases are shown in the following table. Years
| | Cash Flow | | 1–4 | | $18,262,594 | | 5–7 | | 77,266,699 | | 8–10 | | 70,555,600 |
What is the IRR of this project? (Round answer to 2 decimal places, e.g. 15.25%.)| The IRR of this project is [removed] % |
=============================================== Question 23 | |
Morningside Bakeries has recently purchased equipment at a cost of $581,464. The firm expects to generate cash flows of $305,021 in each of the next four years. The cost of capital is 15.75 percent. What is the MIRR for this project? (Round answer to 2 decimal places, e.g. 15.25%.)
| MIRR | | [removed] | % |
================================ | Question 22 | |
Briarcrest Condiments is a spice-making firm. Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,397,769. have a life of five years, and would produce the cash flows shown in the following table. | Year | Cash Flow |
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| 1 | $546,372 | | 2 | -223,736 | | 3 | 749,068 | | 4 | 972,487 | | 5 | 851,108 |
What is the NPV if the discount rate is 16.33 percent? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.) | NPV is | $[removed] |
================================================ | Question 10 | |
Kay Williams is interested in purchasing the common stock of Reckers, Inc., which is currently priced at $48.59. The company is expected to pay a dividend of $2.58 next year and to increase its dividend at a constant rate of 8.5 percent. |
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| What should the market value of the stock be if the required rate of return is 14 percent? (Round answer to 2 decimal places, e.g. 15.25.)
| Market value of stock | | $[removed] | |
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========================================== Question 9 | |
Proxicam, Inc., is expected to grow at a constant rate of 8.50 percent. If the company’s next dividend, which will be paid in a year, is $1.42 and its current stock price is $22.35, what is the required rate of return on this stock? (Round intermediate calculations to 4 decimal places, e.g. 1.5325 and final answer to 2 decimal places, e.g. 17.54%.)
| Rate of return | | [removed]% |
================================================== Question 8 | |
Moriband Corp. paid a dividend of $2.05 yesterday. The company’s dividend is expected to grow at a steady rate of 5 percent for the foreseeable future. If investors in stocks of companies like Moriband require a rate of return of 16 percent, what should be the market price of Moriband stock? (Round dividend to 3 decimal places, e.g. 3.756 and round final answer to 2 decimal places, e.g. 15.25.)
| Market price | | $[removed] |
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| Question 7 | |
Ron Santana is interested in buying the stock of First National Bank. While the bank expects no growth in the near future, Ron is attracted by the dividend income. Last year the bank paid a dividend of $6.37. If Ron requires a return of 15.5 percent on such stocks, what is the maximum price he should be willing to pay for a share of the bank’s stock? (Round answer to 2 decimal places, e.g. 15.25.)
| Maximum price | | $[removed] |
=========================================================== | Question 6 | |
Fresno Corp. is a fast-growing company that expects to grow at a rate of 26 percent over the next two years and then to slow to a growth rate of 12 percent for the following three years. If the last dividend paid by the company was $2.15. |
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| What is the dividend for 1st year? (Round answer to 3 decimal places, e.g. 15.250.)
| D1 | | $[removed] | |
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| What is the dividend for 2nd year? (Round answer to 3 decimal places, e.g. 15.250.)
| D2 | | $[removed] | |
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| What is the dividend for 3rd year? (Round answer to 3 decimal places, e.g. 15.250.)
| D3 | | $[removed] | |
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| What is the dividend for 4th year? (Round answer to 3 decimal places, e.g. 15.250.)
| D4 | | $[removed] | |
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| What is the dividend for 5th year? (Round answer to 3 decimal places, e.g. 15.250.)
| D5 | | $[removed] | |
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| Compute the present value of these dividends if the required rate of return is 14 percent. (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.) | Present value | | $[removed] |
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kindle
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